On Tuesday, Boyd announced that it had sold its half-share in Marina District Development Holding Company, the unit that controls the Borgata, to MGM for around $900m. Boyd expects the deal to close sometime in Q3 2016.
Boyd says it expects to receive around $600m upfront after deducting its share of the Borgata’s debt. Boyd will also collect 50% of any future property tax settlements with Atlantic City, which could provide Boyd with another payday of up to $90m.
Boyd CEO Keith Smith said he’d been pleased with the Borgata’s performance but the sale offered “an attractive opportunity to immediately unlock significant value for our shareholders.” Smith said the proceeds would be used to reduce debt, which has increased due to a couple of recent Las Vegas-area acquisitions.
MGM CEO Jim Murren said the decade-long partnership with Boyd had been “a great one” but he was looking forward to bringing MGM’s loyalty program Mlife Rewards to the Borgata to position the property for further growth.
MGM plans to immediately sell the Borgata for $1.175b to MGM Growth Properties (MGP), its newly created real estate investment trust that went public this year. An MGM subsidiary will then lease the property back from MGP and operate the resort.
ONLINE RAMIFICATIONS ABOUND
The transaction puts MGM squarely in charge of America’s leading online gambling operation. The Borgata’s Bwin.party-powered sites have ranked atop New Jersey’s regulated online gambling market revenue charts since the market opened in 2013, although that could change if the new PokerStars NJ site continues its strong intitial showing.
MGM is now fully responsible for decisions regarding the future of the Borgata-linked online sites, including whether to continue its technology partnership with Bwin.party’s new owner GVC Holdings or whether to exercise the option of its recent technology deal with rival provider GAN.
MGM could also help move the needle on whether New Jersey decides to share online poker liquidity with online operators in Nevada. MGM currently doesn’t operate a Nevada online poker site, although it has been approved to do so by state regulators.
It remains to be seen whether MGM’s ties to the country’s leading online operation could lead to further lobbying for the online cause in other states currently mulling their own regulated markets, including Michigan, home of the MGM Grand Detroit.
MGM’s Murren has previously stated his support for online gambling legalization while dismissing the efforts of competitors like Las Vegas Sands’ boss Sheldon Adelson to ban the practice at the federal level.